This week, Lew Hay, CEO of Nextera Energy Inc., urged lawmakers to extend the wind production tax credit. While it may not seem surprising that the chairman and CEO of one of the nation’s largest wind and solar developers would support tax relief, it is interesting that Hay believes the program should be phased out in 5-10 years.
Bloomberg News reported on Hay’s comments:
“At some point, every technology should stand on its own, but hitting a cliff I don’t think is smart,” Hay said at a Bloomberg Government breakfast in Washington today. “I don’t see any other industry saying we’re willing to sign up for a reduction and a total phase-out in the tax benefits we get.”
Hay is also chair of the Edison Electric Institute, the advocacy arm of the electric industry.
The wind production tax credit (PTC) provides a credit of 2.2 cents per kilowatt for owners of wind projects. The tax credit helped spur a boom in wind projects and has allowed wind to compete with heavily subsidized fossil energies. The credit is set to expire at the end of this year.
The wind industry says it is urgent that the credit be renewed. The uncertainty of whether the PTC will be extended is already discouraging investment and growth. Many companies in the industry have started laying off workers since they cannot begin new projects without certainty around the PTC. Vestas, a Danish wind turbine manufacturer, has warned that it may lose as many as 1,600 US jobs if the PTC is not extended.
This is not the first time that the wind production tax credit has expired. In 2004, new installed wind power declined by 77 percent when the tax credit was not renewed. Conversely, wind power has developed swiftly with the support of the PTC. In only six years, the total installed wind capacity of the United States went from 5,200 to 48,000 Megawatts.
While opponents of the PTC will say that the program is too expensive to continue, it is important to keep in mind that the wind industry is not looking for an indefinite extension of the program. In fact, by saying the tax credit could be phased out, Hay is showing a lot of faith in the industry.
Heck, even the fossil fuel industry isn’t calling for a phase-out. As Hay put it, “I don’t see any other industry saying we’re willing to sign up for a reduction and a total phase-out in the tax benefits we get.”
If Mitt Romney, the presumed Republican presidential candidate, wins in November, the wind industry will likely see a swift end to support of clean energy, including the wind PTC. Although the PTC has received much bipartisan support, Romney would like to see the credit expire.
In June, Karl Rove (former deputy chief of staff for President George W. Bush) and Robert Gibbs (former White House press secretary for President Obama) came together in support of the wind production tax credit at the Windpower 2012 conference in Atlanta, Georgia.
Other conservative supporters of the PTC include Charlie Bass (R-NH) and wind-state conservatives such as Rep. Steve King (R-IA) and Sen. John Thune (R-SD). There is also a bi-partisan coalition of 23 governors (led by Gov. Terry Brandstad (R-Iowa)) that support extending the PTC. Romney’s view on this issue is out of step with many in his party and Americans who support promotion policies for clean energy and environmental protection.
– Nick Richter